Economic Stimulus Plan

How often have you heard the saying – Life is a challenge? Maybe often; maybe not. Regardless, note that in the days of what some term a recession, life is not just a challenge, it is proving to be a constant struggle. More and more people are finding out to their chagrin that just as they had figured out a way of making ends meet, the ends have been moved further apart. It is becoming difficult to pay for the basic necessities of life like the rent of homes, mortgage payments, provide for food, clothing and education not to mention health insurance.

Despite this, we fight on hoping that eventually things may get a little easier. However, what we have to remember is that even if things do start getting better, it may be quite a while before we are able to feel the effects of any improvement. There have to be things that we can do right away so that our finances improve and we are able to meet at least our very basic demands. Hence starting on a program right away to manage your money wisely will shore up your financial resources, showing immediate effects. And continuing this program even in times of prosperity will ensure that you are always covered whatever the economic conditions may be like. Being wise with your money allows you to not just get by, it allows you to plan and prepare yourself financially for all the goals and dreams you have set out for yourself.

For many people the idea of managing money seems very difficult and many are even convinced that they are simply not capable of it. However, what one has to understand is that money management is just a skill to be learned and then put into use. Just as we slowly learnt to read and write or learnt to later drive a car, money management too can be learnt with the right amount of guidance and patience. While not many are born with the skills to be a good manager of money, almost anyone can learn them provided they put their mind to it. This book is meant to provide general guidance on how to manage money wisely with practical, personal financial planning tips and advice.

Before we start

Does this scenario sound familiar to you? You are living almost from day-to-day, with just enough money to make it till the end of the month. When you have some extra money, you somehow always manage to find something to spend it on, some things you thought were essential enough. Do you feel that almost all your time is taken up in deciding where your money is going to go? You may also feel that seeing the amount of expenses that you have and the comparatively little that you seem to bring in, hoping to control or manage your money is almost foolish. However, this is the absolutely wrong kind of attitude to take towards money.

Nearly anybody can train himself or herself to manage their money better. All it requires is proper advice and some practical tips on how to go about it. Only by managing your money properly can you meet your daily expenses with comfort, save some to take care of unexpected emergencies and expenses and put some money aside to have the life that you have visualized for yourself.

So, prepare yourself for some tough times when you will have to make some tough decisions but be assured that in the long haul, this will bring you the peace of mind and prosperity you have always aimed for.

Where Does Your Money Go?

Do you remember having $30 at the beginning of the week? Today is barely Wednesday and you have completely gone through it. Do you even remember what you have spent it on? You know for sure that you did not spend it on anything exorbitant so how could it have absolutely disappeared? You ask yourself the same question, being asked frequently in almost all households across the country – where did my money go?

This type of spending is what is typically called a spending leak. Just as a faucet that drips water wastes precious water, spending leaks can waste precious money. To fix the leak in the faucet, you need to know where the leak is – similarly to plug a spending leak, you need to know where the leak is i.e. you need to know where your money is going.

The exercise to track where your spending leak is coming from is a simple one. Just keep a small spending diary on you. Say like a small spiral notebook that makes it easy to take notes. Keep this constantly on you – either in your pocket or in your purse. Now, everyday write down everything that you spend on. It does not matter if it is just a cup of coffee, a newspaper or a designer gown. Note down everything that you spend on and the amount you have spent. Request everyone in your family to do the same.

After a few weeks or better still, after a few months of tracking your spending on a daily basis, take a close look at where you are spending most your money on. Chances are that you will quickly be able to locate your spending leaks. Having identified how exactly your money is being spent, now you can start giving some more consideration to the items the money is being spent on and seeing whether you can plug any of the spending leaks.

You will find many personal finance applications in the market today that will allow you to do exactly this but in a more organized manner and they will be able to give you a break up of what you are spending on in a more detailed and illustrated manner.

Whatever method you use, it is very important that you have a very good idea of where your money is going. Only by reducing and where possible, completely eliminating the spending leaks will you find yourself on a way of financial recovery. You will soon find yourself having enough money to pay more bills and even put some aside.

Some common examples of spending leaks are expenses that could be avoided or temporarily postponed like the ones listed below:

• When you are thirsty, you go out for soft drinks
• Instead of home cooked meals, there is an excess of fast-food meals or take-outs being purchased
• You spend far more on snack foods and coffee than you should
• Instead of using the library, you over-subscribe to magazines and books
• You may spending too much on lottery tickets or gifts
• You may not be needing or using most of the channels presently on your cable or all the options that are presently offered with your phone service.

A little later, we will give you practical ways of studying each expense carefully, deciding on how necessary it is and then either reducing it or eliminating it completely.

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